Notable buys are seen in the dollar when the markets enter the US session. There is no apparent reason for the rally, except that some traders may be adjusting positions ahead of the high-profile G7 summit. The robustness of the Swiss franc confirms this preemptive risk aversion. Meanwhile, the pound sterling also strengthened after strong GDP data. On the other hand, the New Zealand dollar and the Australian dollar are again under selling pressure along with the euro.
In Europe at time of writing, the FTSE is up 0.59%. The DAX is up 0.54%. The CAC is up 0.77%. The yield on Germany’s 10-year bonds fell -0.0132 to -0.266. Earlier in Asia, the Nikkei fell 0.03%. The HSI index in Hong Kong rose 0.36%. China Shanghai SSE was down 0.58%. The Singapore Strait Times fell 0.14%. The yield on Japanese 10-year-old JGBs fell from -0.0194 to 0.030.
Britain’s NIESR forecasts GDP growth of 1.5% in May and 0.9% in June.
NIESR said the retail and hospitality business will significantly contribute to UK growth in May. He predicts monthly GDP growth of 1.5% in May and 0.9% in June. But he also warned that “postponing the final step of re-discovery could delay recovery in the arts and recreation by several weeks, but if it avoids a third wave of infections, it could promote sustained recovery in the second half of the year.” year.”
“Like March, April was a month of rapid growth in service, as expected, thanks to minor store openings, outdoor hospitality and nearly full school attendance. May will follow a similar pattern as further restrictions will be lifted, as June, if the final step of the roadmap goes as planned. But the downturn in construction and manufacturing, which was less affected by isolation in 2021, reminds us that we should now focus on the outlook for the economy in the second half of the year, after the temporary effects of the resumption of work have ceased to provide strong monthly numbers. increases. ” Rory McQueen Chief Economist – Macroeconomic Modeling and Forecasting.
UK GDP rose 2.3% m / m in April, again surpassing the initial peak of recovery
UK GDP grew 2.3% MoM in April, slightly below expectations of 2.4% MoM.This remains the fastest monthly growth since July 2020, as restrictions on the pandemic have been eased. The service sector rose 3.4% mom. But production fell -1.3% mom, the first drop since January. Construction also contracted -2.0% MoM. Overall, GDP remains -3.7% below the pre-pandemic level seen in February 2020, but was 1.2% above the initial peak of recovery in October 2020.
It was also published that industrial production in April amounted to -1.3% m / m, 27.5% y / y, against expectations of 1.2% m / m, 30.2% y / y. Manufacturing production amounted to – 0.3% m / m, 39.7% y / y, against expectations of 1.5% m / m, 42.0% y / y. The deficit of the trade balance of goods slightly narrowed to -11.0 billion pounds.
Bundesbank raised its GDP forecast for Germany at the start of strong growth
The Bundesbank raised its GDP growth forecast for Germany to 3.7% (from 3.0%) in 2021, to 5.2% in 2022 (from 4.5%). Growth is expected to slow to 1.7% in 2023. It says that “the German economy is overcoming the crisis associated with the pandemic and is at the beginning of a strong recovery.” The economy is expected to return to pre-crisis levels “this summer”.
Inflation is also forecast to accelerate to 2.6% y / y this year (up from 1.8%). The inflation forecast for 2022 has been raised to 1.8% (from 1.3%), and for 2023 – to 1.7% (from 1.6%). It added that “the exceptionally high inflation rates projected for the second half of 2021 by German standards may ultimately change the perception of inflation and the expectations of economic agents.”
“As a result, wage and pricing behavior could change and further inflationary pressures. This would be especially relevant if overall price inflation in the near future were even higher than anticipated here, ”the report added.
ECB Node: Structurally Greater Fiscal Policy Role Needed
ECB Governing Council member Klass Knot said that “as the current low interest rate environment is likely to continue, we will need a structurally more significant role for fiscal policy in macroeconomic stabilization for the foreseeable future.”
He hailed that the € 800 billion compensation fund is “a big step in the right direction”. “If it becomes a tangible success, it will certainly set a precedent with the promise of more.”
BusinessNZ New Zealand production rises to 0.3, putting upward pressure on raw material prices
New Zealand’s Manufacturing PMI BusinessNZ rose 0.3 to 58.6 in May. Looking at some of the details, production has grown from 64 to 65.3. Employment fell from 52.2 to 51.5. New orders increased from 61.0 to 63.7. Inventories of finished goods fell from 54.7 to 52.4. Deliveries rose from 52.6 to 53.5.
BusinessNZ Chief Operating Officer Catherine Beard said: “Globally, manufacturing activity continues to grow at a strong pace, peaking in 11 years in May. However, this has led to an increase in raw material prices in most countries, including New Zealand, taking into account the comments of the respondents, which refer to the increase in the cost of raw materials.
Average daily EUR / USD forecast
Daily pivots: (S1) 1.2148; (P) 1.2171; (R1) 1.2199; More…
EUR / USD is falling noticeably today after failing to hold above the 4-hour 55-day moving average, but remains above the 1.2103 support. Primarily, the intraday bias remains neutral. On the other hand, below 1.2103 will target the 1.1985 support. A break there will confirm that the consolidation pattern from 1.2348 has started the third leg. Then a deeper drop will be seen to support 1.1703. On the other hand, a break above 1.2265 will resume gains from 1.1703 to retest the 1.2348 high.
More broadly, the rise from 1.0635 is seen as the third phase of the pattern from 1.0339 (2017 low). Further rally towards cluster resistance at 1.2555 can be seen (38.2% retracement from 1.6039 to 1.0339 at 1.2516). This will remain the preferred option as long as the 1.1602 support is maintained. The reaction from 1.2555 should reveal the main long-term momentum of the pair.
Updating economic indicators
|22:30||New Zealand dollar||BusinessNZ Manufacturing Index for May||58.6||58.4||58.3|
|23:50||JPY||BSI Large Manufacturing Index for Q2||-1.4||1.6|
|06:00||Pound sterling||GDP m / m Apr||2.30%||2.40%||2.10%|
|06:00||Pound sterling||Industrial production m / m apr||-1.30%||1.20%||1.80%|
|06:00||Pound sterling||Industrial Production YoY Apr||27.50%||30.20%||3.60%|
|06:00||Pound sterling||Production Production m / m Apr||-0.30%||1.50%||2.10%|
|06:00||Pound sterling||Manufacturing Manufacturing YoY Apr||39.70%||42.00%||4.80%|
|06:00||Pound sterling||Service index for 3 months / 3 months Apr||1.40%||-2%|
|06:00||Pound sterling||Trade balance (GBP), Apr||-11.0 billion||-11.8 billion||-11.7 billion|
|12:30||CAD||Production capacity utilization Q1||81.70%||80.50%||79.20%|
|12:32||Pound sterling||NIESR GDP estimate, May||3.80%||1.30%||1.50%|
|14:00||U.S. dollar||Michigan Consumer Sentiment, Jun.||84||82.9|